Arcaffe Emerges as Potential Buyer for Arkia Israeli Airlines Amid Heavy Losses
Arcaffe cafe chain has entered advanced due diligence to acquire Arkia Israeli Airlines, joining competing bids from Israir and El Al as the carrier faces projected annual losses of up to 60 million dollars.
Arcaffe, the premium cafe and bakery chain owned by Yaron Yarkoni, has emerged as a potential buyer for Arkia Israeli Airlines, which is currently up for sale by the Nakash brothers. According to market reports, Arcaffe is conducting advanced due diligence independently, without an accompanying purchasing consortium.
Yarkoni, who has been involved with Arcaffe for nearly 15 years, increased his stake to 90% in 2019 after acquiring an additional 30% at a valuation of 80 million shekels. The chain operates approximately 55 branches, primarily focusing on residential neighborhood locations with self-service formats, while roughly one-fifth of its branches are situated in shopping malls and retail complexes.
Competition and Leadership Response
As previously reported, Arkia has drawn interest from competing industry players, including Israir Airlines controlled by Rami Levy, and El Al Israel Airlines, the dominant carrier in the Israeli aviation market. Following the reports, Arkia CEO Oz Berlovitz addressed the airline's workforce in an internal memo, reassuring employees that operations continue as usual while controlling shareholders seek to divest their holdings.
Berlovitz emphasized the challenging operational environment, pointing to geopolitical headwinds and surging jet fuel prices that weigh heavily on flight operating costs. Management's primary responsibility, he noted, is making necessary adjustments to maintain regular operations and service continuity amidst these pressures.
Financial Standing and Fleet
Market assessments regarding Arkia's valuation vary, with some estimates placing the company's value at approximately 40 million dollars, reflecting its current financial standing and liabilities. During the first three quarters of the year, Arkia accumulated losses of approximately 30 million dollars, and the company is projected to close the year with total losses reaching 50 to 60 million dollars.
Arkia's fleet comprises 20 aircraft, including four wide-body jets, and the airline served 40 destinations over the past year. The carrier launched a route to Hanoi, Vietnam, roughly six months ago, followed by a new connection to the Philippines in September. Plans to launch flights to Tokyo were canceled after regulatory approval for wet-leasing aircraft was denied. Arkia declined to issue an official comment.
